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May 2 - May 3, 2018
In 1980, when China’s growth spurt began, the Indian and Chinese economies were of roughly equivalent size. By 2015, China’s economy was five times the size of that in India.
The suspicion of Western capitalism is always likely to remain a powerful strand in Indian thinking. This, after all, was a country that was once colonised by a Western multinational – the East India Company.
Viewed from Delhi, the global political order has also long seemed intrinsically unfair. Crucial post-war institutions such as the UN and the IMF were shaped before India had even achieved its independence in 1947 – and have proved extremely hard to reform ever since.
During the presidency of George W. Bush, however, the US decided to change tack – in the interests of cultivating a warmer relationship with a rising India. The US–India nuclear deal, signed during the Bush presidency, effectively recognised India as a legitimate member of the nuclear-weapons club.
This determination to prevent Pakistan defining India’s global strategy is only strengthened by the belief in Delhi that China is bolstering Pakistan, with the precise intention of keeping India preoccupied and contained. The Pakistani nuclear programme received crucial technical assistance from China.
In April 2015, President Xi paid a state visit to Pakistan – the first Chinese leader to visit the country in nine years.
From Gwadar, the oil could then be transported overland, across a 3,000-kilometre land route into western China. Much of the rest of the billions that China proposed to invest in Pakistani infrastructure would be directed to creating the road, rail and pipeline links to make those shipments possible.
Any Chinese move to dam the rivers of Tibet would potentially pose a mortal threat to India’s water supplies.
Deloitte, the largest accounting firm in the world, which is based in New York, appointed Punit Renjen, another expatriate Indian, as the firm’s global CEO in 2015.
While the last years of the twentieth century and the beginning of the twenty-first century had been shaped by the emergence of the Pacific Rim as the new core of the global economy, by the mid-twenty-first century, the rise of the Indian Ocean Rim – linking India with a fast-growing African continent – could well be the next centre of global economic dynamism.25 It is with this thought in mind that the futurologist Hans Rosling likes to recommend that investors buy beachfront properties in Somalia.
Great quote
swiftly became apparent to me that the Western-educated liberals formed a very thin layer at the top of Egyptian society. This, after all, was a country where one in three of the population was illiterate and the most powerful cultural influence was not Facebook – as the West fondly imagined – but fundamentalist Islamist preachers, beamed in by satellite television from the Gulf.
In February 2015, President Putin became the first leader of a major power to visit Sisi in Cairo – thoughtfully presenting his host with a Kalashnikov rifle as a mark of esteem.
In the background, there is also a Saudi fear that the shale revolution in the US is gradually removing the underlying rationale for an American commitment to the security of Saudi Arabia.
By 2014, more than two-thirds of Saudi oil was being sold to Asian markets, with China the largest single customer, and just 8% was going to the United States.
The US ships that guard the Strait of Hormuz in the Gulf – ensuring that Saudi oil can continue to reach its markets – are essentially safeguarding China’s energy needs.
America has watched the burgeoning Israeli–Chinese relationship with a degree of discomfort – intervening behind the scenes on a couple of occasions, to warn their Israeli allies not to sell sensitive military technology to China.
For Naftali Bennett, the rising star of the Israeli far right, America was feckless and Europe was intrinsically anti-Semitic. Instead, Israel should look to the rising economies of Asia.
The population of Africa, which is currently more than 1 billion, is projected by the UN to be over 2.5 billion by 2050.
But when post-Gaddafi Libya collapsed into near anarchy – with the internationally recognised government driven out of Tripoli in 2013 and forced to meet on a cruise ship off the Libyan coast – the French and British governments relapsed into something like embarrassed silence.
The fate of the Middle East in the Obama years illustrated an important point about Easternisation. America’s relative decline is just part of a bigger phenomenon – which is the relative decline of Western power as a whole.
Different parts of the world pose different sorts of challenge and threat. Even before the financial crisis of 2008, Europe had been struggling with low growth and high unemployment. The prolonged and intractable nature of these problems means that more and more economists are giving voice to the idea that competition with low-cost producers in Asia, in particular China, has contributed to the European economic malaise. This is a notion that was once shunned by orthodox economists, but that is becoming increasingly mainstream.
In the five years after the financial crisis, Italy lost 25% of its industrial capacity. The problem was not just the collapse in European demand caused by a deep recession. It was also that Italian manufacturers, the traditional backbone of the economy, were finding it increasingly hard to compete with competitors in Asia.
Failed states in the Middle East, in turn, created havens for jihadist movements intent on taking the fight to Europe itself.
Given the fears that the prospect of a powerful Germany can still arouse, it was fortunate that the dominant political figure in Germany in this period was a calm, middle-aged woman.
In 2012, a leading Greek politician described to me the chilling effect the new headmistress of Europe had on her fellow leaders at gatherings of European conservatives: ‘When she walks into the room, everybody falls silent.’
The real problem for German leadership in Europe, however, was not naivety. It was that Chancellor Merkel was leading a country that yearned for nothing more than a quiet life. The Germans had learnt the lessons of the twentieth century almost too well.
The problem is that the erosion of Europe’s own military capabilities has made European nations increasingly dependent on the security guarantees that America provides through Nato. Looking to the US to provide military protection in Europe, while undermining American security policy in East Asia, does not look like a sustainable policy. That is all the more the case now that the countries of the EU are once again facing a military threat from Russia.
In the aftermath of the Ukraine crisis, Nikonov was just one of a number of prominent Russian intellectuals pushing the ‘Eurasian’ thesis. Another was Alexander Dugin, an extravagantly bearded anti-Western ideologue, who was also a regular on Russian television – raging against the decadence and perfidy of the West and lauding the unique qualities of Russian culture. Dugin’s magnum opus, The Foundations of Geopolitics, argues that Russia is a victim of a Western conspiracy led by the US and Nato, which aims to contain and break the Russian nation.
As a former intelligence operative himself, Putin was probably genuinely convinced that Western intelligence was plotting against him, and that uprisings in Ukraine were merely a template for eventual ‘regime change’ in Moscow itself.
Periods of infatuation with the West, which could last for decades, alternated with deep disillusionment and the rediscovery of the idea of Russia as an Asian or, at least, Eurasian country.
After nearly a decade of negotiations, China and Russia signed a deal to build a pipeline to pump gas from Siberia to China.
Tsarist Russia played a crucial role in the ‘demolition of the old China-centred world order in East Asia’.18 Much of the Russian far east, including Vladivostok, was once Chinese and was only ceded to Russia through the treaties of Aigun and Peking in 1858 and 1860: two of the notorious ‘unequal treaties’ of the Qing era that now make up so much of the mythology of modern Chinese nationalism.
After the annexation of Crimea, an admiring biography of Putin made the best-seller lists in China, and approval ratings for Russia shot up in Chinese opinion polls.
The challenges to the US-led global order from Russia and China have also opened up new strategic, economic and ideological debates in nations hitherto regarded as heading ineluctably westwards. Foremost amongst these are Turkey, Hungary and Ukraine itself.
Their decisions reflected global economic, political and ideological trends. The fact that the West no longer dominates the world economy in the way that it did, even in 1990, has opened up new strategic choices for many countries. Turkish companies, for example, have prospered by expanding rapidly in Russia, the Gulf States and Central Asia. The West is no longer the only option. The same is true in the realm of ideas. The rise of Asia, the geopolitical boldness of Vladimir Putin and the economic troubles of the US and Europe have all made it easier for political leaders with authoritarian
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Some of the volunteer battalions fighting the Russians in the east also used imagery from the 1930s that played right into the hands of Russian propagandists.
My interviewee’s response was again not entirely convincing: ‘A couple of the guys had the SS sign on their helmets. But they said they didn’t know what it was – they just knew it drove the Russians crazy!’
Erdogan’s own rhetoric also became increasingly overheated. One fairly typical remark was made in late 2014; as the death toll in Syria mounted, Mr Erdogan told his people: ‘Believe me they [the West] don’t like us . . . They look like friends, but they want us dead. They like seeing our children die.’
Indeed the Ethiopian economy grew by an average of over 10% a year between 2004 and 2014 – and the World Bank predicts that it will continue to be one of the world’s fastest-growing economies over the following five years.
China’s two-way trade with Africa grew twentyfold between 2000 and 2010, from $10 billion a year to $200 billion. That made China comfortably Africa’s largest trading partner.
After all, the pattern of European imperialism had often been that traders (or missionaries) made the first breakthrough, creating conflicts and demands that later led to the imposition of political control from Europe.
Like the Brazilians, some Africans also worry that China’s relationship with Africa has replicated some of the malign economic characteristics of colonialism, because Africa has sold raw materials and imported higher-value manufactured goods in return.
But, taking a longer view, Obama’s stress on strong institutions was well judged. For in an age when the world economy is Easternising, the best chance Americans and Europeans have of retaining their global political power lies in the enduring strength of Western institutions.
The devastating effect of the Swift ban was noted all over the world. When the West started imposing sanctions on Russia in the aftermath of the annexation of Crimea, one senior Russian diplomat warned that cutting his country loose from Swift would be regarded as tantamount to a declaration of war.
This chapter examines why so much of the world is still wired through the West by looking at some of the key institutions that underpin the global economic and political order. These include high-profile international institutions such as the United Nations, the World Bank and the IMF; but they also include much lower-profile organisations that are often regarded as technical and apolitical in nature – such as Swift or ICANN, the organisation that manages internet domain names,
The fact that the dollar is the world’s leading reserve currency is, perhaps, the single biggest source of American institutional strength
The answer to that question depends on the significance of economic power in deciding who controls global institutions. If economic might is what ultimately matters, we can expect more of the world’s wiring to run through Asia in the future.
If international institutions no longer reflect the realities of the world around them, they will eventually become irrelevant – and the world’s most powerful countries will bypass them or set up alternative organisations.
